Beam to Close Cincinnati Bottling Plant in 2011

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FILED NOVEMBER 1, 2009

Dear Client:

Beam Global announced plans this afternoon to reduce its bottling system from 4 to 3 operations beginning in 2011. Beam says it will transition production of DeKuyper cordials and other spirits bottled in Cincinnati, Ohio, to its facilities in Frankfort and Clermont, Ky, and the Cincinnati plant will discontinue operations in the second half of 2011. It’s likely this will result in lay-offs, which Beam hopes to offset with approximately 120 new jobs in Kentucky by the end of 2011. Beam spokeswoman Paula Erickson told WSD there is a total of 184 employees at the Cincinnati operation. She stressed that since the Cincinnati operation will not close until the second half of 2011, it’s too early to speculate about potential lay-offs.

“While we will be adding jobs in Kentucky, it’s important to underscore that the decision to consolidate our U.S. bottling facilities in 2011 is no reflection on the dedication and hard work of our associates in Cincinnati,” said Ian Gourlay, Beam senior vice president of global operations and supply chain.

He said the company will work with those employees to “ease the transition as these plans progress over the next two years, and we hope that many will be interested in employment at our Kentucky operations.”

So why did Beam choose to close the Cincinnati plant? Mainly because the Kentucky facilities can accommodate more bottling traffic. “Our Kentucky facilities in Frankfort and Clermont have the capability to absorb the bottling activity currently performed in Cincinnati as well as the potential to accommodate higher volumes in the future,” said Ian. Beam also plans on investing in technology upgrades at its Frankfort plant. In Kentucky, Beam Global operates distilleries with bottling capability in Clermont, Frankfort and Loretto, as well as a distillery in Boston, Ky.

RETAILER DIRECT SHIPPING CASE BREWING IN INDIANA

Local liquor store Cap n’ Cork in Fort Wayne is suing the state of Indiana for what it considers a discriminatory law against retailers, reports The Journal Gazette. It all started when the State excise police cited the store for violating its permit by using a third party carrier to deliver wine to local wine club members. The law states that retailers must use their own employees, and not a third-party carrier, to deliver wine to state residents. In response, Cap n’ Cork co-owner Andy Lebamoff filed suit and accused the law of being unconstitutional and discriminatory because wineries are allowed to ship to consumers using a third-party common carrier. Andy also claims he received permission from the Indiana ABC in the 1980s to conduct this shipping practice. In response, a spokeswoman for the excise police stated: “There is no record at the ATC of Cap n' Cork receiving permission to ship their product via common carrier,” according to the article.

Note that it is illegal for retailers to ship directly to consumers in the state. Wineries have limited direct shipping rights only after Indiana residents have first made a face-to-face transaction.

Jim Purucker, the executive director of the Wine and Spirits Distributors of Indiana, said he became aware of Cap n’ Cork’s shipping practice when he received an email from a California retailer inviting him to join the NRA Wine Club. Jim said he joined the club assuming they would deny him shipping since it’s illegal in Indiana, but he was accepted in the club and a box of wine from Cap n’ Cork was left on his porch via UPS. So what’s wrong with this picture? One, it’s illegal for retailers to ship in the state. Two, UPS left the box without obtaining proof of age or a signature from the recipient. He then reported the incident to the Alcohol and Tobacco Commission (TTB). Afterwards, Jim said he joined the Wall Street Journal Wine Club and another box of wine from Cap n’ Cork arrived without first checking his ID.

Cap n’ Cork is hoping to change Indiana’s retail shipping law to allow third-party common carriers to make the deliveries because they “can't use its own employees to deliver to customers hundreds of miles away,” according to the article. The case has since been moved to the US District Court of Southern Indiana where Cap n’ Cork attorney Robert Epstein is preparing a motion for summary judgment.

JAMESON HONORED AS ONE OF “AMERICA’S HOTTEST BRANDS”

The recession did little to slowdown Jameson’s momentum in the past year and Advertising Age took notice. The publication honored Jameson as the only spirit in its “America’s Hottest Brands” list for 2009. Pabst Blue Ribbon was the only other alcoholic beverage to make the list.

Ad Age writer Jeremy Mullman credits Jameson’s target audience, which is “affluent young professionals least affected by the recession.” These consumers are more willing to pony up the cash at retail and on-premise, while other brands at the $20 price point are suffering. Jameson already drew 40% of its sales at the on-premise, but managed to raise that number another 20% in 2009. Similarly, Jameson’s retail sales grew 28% through August, based on Nielsen scan data.

So how did Jameson target these sought-after consumers? Word-of-mouth. It positioned itself somewhere between bourbon and Scotch with a European flair, said Jeff Agdern, vp of marketing for whiskey and cognac at Pernod Ricard, to Ad Age. The word-of-mouth campaign began in New York in the 1990s and eventually got big enough to warrant print and out-of-home advertisements in other major markets. Earlier this year Jameson launched its first TV campaign from TBWA/Chiat/Day, New York.

WSD BRIEFS:

ARSONIST PLEADS GUILTY. Mark Anderson pled guilty yesterday to arson and 18 other criminal counts in the U.S. District Court in Sacramento. In exchange for this guilty plea, which allowed him to skip the trial set for today, prosecutors agreed to recommend a sentence of 15 years, 8 months in prison. Mark has already served three years in prison and will be sentenced January 26. You’ll recall that Mark was accused of setting fire to a wine storage facility in Vallejo in 2005 that destroyed an estimated 6 million bottles of wine worth $250 million. He still faces embezzlement charges in Marin County but is hoping those charges will be dropped.

BROWN-FORMAN’S BOARD OF DIRECTORS raised the company's quarterly cash dividend by 4.3 percent to 30 cents per share on its class A and class B stock. Stockholders of record at Dec. 7 will receive the cash dividend on Jan. 4. The dividend boost will raise the annual cash dividend by 5 cents to $1.20 per share. Shares of Brown-Forman added 31 cents to close at $51.30.

AVENIU BRANDS TAKES ON CODORNIU CAVAS. Aveniu Brands, which is wholly by Spain’s Codorniu Group, has finalized an agreement with Bronco Wine Company to take over the exclusive U.S. management of Codorníu cavas. Further details were not disclosed.

DELTA AIR ADDS THREE THIEVES WINE. The Three Thieves Bandit wines, which are packaged in Tetra Paks, were selected by Delta Air Lines as their exclusive by-the-glass wine on international flights. The Tetra Pak containers were reportedly “a major draw” for Delta because the light-weight packaging is easier to store and stack.

Until tomorrow, Megan

“Courage is resistance to fear, mastery of fear - not absence of fear.”Mark Twain

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